Leverage Solution 11 10 08

MBGM Capital Inc

Commercial Funding Consultants

Providing Unique Funding Solutions to Large Providing Unique Funding Solutions to Large Project Challenges.

Premium Leverage Solution

1Signature Leverage Solution

Signature Leverage Solution

This solution enables businesses or private persons to garner advanced funding on unconditional contracts which are investment grade.which are investment grade.

State of the Market: This program is not readily available in the market. It is not asset-based. No brick and mortar and no appraisals are required in order to facilitate this product



7 Reasons for using This Program

1. Ease of Close.

2. Flexibility of structuring (deferred payments, repayment start date, etc)date, etc)

3. SPEED of funding (45 days ).

4. NO SURPRISES (not for you, the client, or anyone else).

5. NO upfront fees.

6. No other fees (such as renewal fees, underwriting, or closing).

7. NO Equity to give away.



Jargon:

The “borrower” is known as the “developer” or the The “borrower” is known as the “developer” or the “seller”.

The person who is paying on the collateralized paper is known as the “off-taker” or “purchaser.”



How does this work? Let’s say your company has recently landed a $100MM contract

with a BBB or better rated company (rated by S&P or Moody’s).

The BBB or better rated company, who we’ll call ABC Company, The BBB or better rated company, who we’ll call ABC Company, is guaranteeing to purchase $100MM worth of your product or service (coal, silver, aluminum, bio-diesel, ethanol, etc.) over the course of the next 5 years.

This could also be a contract to develop a property. During the negotiations of the contract, several things must be discussed with ABC and included in the contract including:


Signature Leverage SolutionThe Contracts must have the following criteria:

Unconditional and absolute

US Dollars

Investment grade

Assignable

Sum Certain (In this example 100MM)

Date Certain (In this example 5 years)



Underwriting Consideration: The primary consideration for the approval for funding is the credit worthiness of the business entity that

is responsible for paying on the instrument.

Lending Ratio: Up to 100% of the acceptable instrument value, less the cost of funds.the cost of funds.

Cost of funds —7.5 to 9.5 fixed, (could change based on market conditions) compounded semi-annually.

Loan Amounts: Minimum of $10MM.

Maximum- None

Term- at least 1 year on the contract



The Funding Process:

Submit a copy of the contract (or proposed contract) along with a brief summary that outlines the relationships

between the developer and the off-taker and the basic between the developer and the off-taker and the basic business information of both parties.

Give a background on all of the parties involved, what are they trying to accomplish, and for what purpose they want

to finance.

Continued..



(Please note, the offtaker must be located in the U.S. or the contract must be done through their US based office)

Contract review may be required, by our legal counsel. There is no extra cost for this.There is no extra cost for this.

We will rate it, and/or make suggestions for improvements to make it acceptable.

(Repeat as necessary)

Continued…



Once we receive an acceptable instrument, we will price it. We can provide preliminary pricing earlier on; however, it is subject to change depending on when the terms are accepted due to market changes.the terms are accepted due to market changes.

Once the client accepts the proposal, we’ll begin due diligence.

Once due diligence is completed, we fund. The client gets their funds. It’s that simple.



Collateral Examples:

CD’s- Grade is evaluated by the bank that is holding the CD

Mutual Funds- Grade is evaluated by the bank that is holding the CD Mutual Funds- Grade is evaluated by the bank that is holding the CD

Unconditional contracts to purchase goods- Grade is evaluated by the purchaser of the goods.

Irrevocable Letters of Credit- Grade is evaluated by the bank issuing the LOC.

Continued…



Unconditional bonds- Grade is evaluated by the issuer of the bond.

Unconditional retirement package- Grade is evaluated by the entity paying the retirement benefits.Unconditional retirement package- Grade is evaluated by the entity paying the retirement benefits.

Annuities- Grade is evaluated by the entity paying out or holding the annuity.

Tax Credits- Grade is evaluated by the entity issuing the tax credit.



Contracts we are able to fund against:

Professional Athletes (Retirement Packages)

Movie Production Companies

Alternative Energy businesses (bio-diesel, ethanol, coal, etc.)

CEO’s and Executives (golden parachutes clauses)

LARGE equipment manufacturers

Lawyers who handle structured settlements

Continued…



Low Income Housing Developments (tax credit collateral)

Tax Credit holders

Large annuity and CD accounts

Natural Resource businesses (ore, copper, precious metals, wind turbine farms)

Continued…



Banks who issue Letters of Credit

Banks who issue “product financing” (pick up where they leave off)

Large retailers (Wal-mart, Costco, Target, Toys R Us, etc.)

Timberland and other natural harvest companies Technology companies

Continued…



Non-profit organizations

Financial planners

Business brokers Business brokers

Hollywood professionals

Developers

Universities (endowments)


Signature Leverage SolutionCase Study

Scenario.

A regional transportation company doing business A regional transportation company doing business with an investment rated company for number of years. The investment rated company’s business is to provide snacks consumers.

The transportation company had major challenges every year.

Signature Leverage Solution 17


Challenges were.

1. Rising fuel costs 1. Rising fuel costs

2. Cash flow (30-60 days to get paid)



Solution to their challenges.

Since the transportation company was already doing Since the transportation company was already doing business with the major entity, and they had already a contract with the entity. We advised our client (transportation company) on leveraging the existing contract to get advance funding.



The Funding Process

1. The client sent us a copy of the contract.1. The client sent us a copy of the contract.2. After we reviewed the contract, there was a standard

clause (Force Majeure) which was not acceptable.3. We informed the client that there was an issue with

the contract, (which is standard in most contracts).4. Offered the client 2 solutions to the issue.



The Funding Process5. First solution was to get an insurance against the

“Force Majeure” clause.

6. Second solution is to get an amended contract based on the master contract.

7. The client chose to go with the second solution, because it did not cost them any more money.



The Funding Process8. The developer, the off-taker and the funding entity

came to the table, to work on the amended contract.(Which guaranteed a portion of the contract, in this (Which guaranteed a portion of the contract, in this case, 11 million USD)

9. The process of creating the amended contract took 4 weeks to complete. (could be less or more time)

10. The funding process took 4 more weeks complete. (could be less or more time)



Benefits for the Developer1. Not a loan, they did not have to show any financials or

go through a credit check.2. No Equity stake.2. No Equity stake.3. No 3rd party reports (appraisals, etc)4. Upfront funding (90% in this case), focus on growing

business, instead of worrying about paying off the loan.

5. Cash flow problem was greatly reduced.6. Financial strength is enhanced.



Benefits for the Off-taker1. In this case, since it was a 1 year contract, they elected

to not pay until the end of the contract. (If the contract was for 5 years, they could’ve paid, every year or until was for 5 years, they could’ve paid, every year or until the end of the contract)

2. Used the money for other investments.3. Benefitted by getting the service for 11 months.



Thank You. Karna Hoskote President

MBGM Capital Inc. MBGM Capital Inc.

http://www.commercialfinances.net [email protected]

312-628-7366


Documents

Leverage Solution 11 10 08